MINING ACTION

Evening Post, Volume LXXXVIII, Issue 61, 9 September 1914, Page 4

MINING ACTION

WEALTH OF NATIONS MINE MB. D. ZIMAN'S CLAIM [VERDICT FOR PLAINTIFF. (FROM OUB OWN CORRESPONDENT.) LONDON. 31st July. Mr, Justice Darling and a special jury have been engaged this week in heaving th© action brought, by Mr. David Ziman against the Consolidated Goldfields of New Zealand, Ltd. Mr. Ziuian claimed £12.000 damages for alleged breach of agreement. His case was that th© defendant company agreed with him for the resale of the Wealth of Nations mine and the payment to him of £12,000 out of the profit of resale. He complained that the company had disregarded his request to sell the property. In its defence- the company denied the agreement, alternatively saying that it had been waived, rescinded, or abandoned by Mr. Ziman. Mr. J. A. Conlpston, K.C., Mr. D. H. Hogg, and Mi". Cohn were for th© plaintiff, and Mr. Utfjohn, K.C., Mr. Neilson, and Mr. Perceval for the defendants. In opening the case for the plaintiff, Mr. Compstom said that the agreement relied upon was entered into on 20th February, 1896. Plaintiff was born in Eussian Poland, but came to England at an early age. After many years engaged in South African mining, he went to New Zealand, where he obtained rights over various mining properties. Plaintiff ultimately came to London, and tho defendant company was formed for the purpose of taking over the property now in dispute. The capital of the company was to be £225,000 in £1 shares, of which, one share, subscribed by Mr. Ziman, wae called the founder's share, and entitled to 25 per cent, of all profits so soon as the dividends paid to th© shareholders 100 per cent. The requisite 'dividend entitling Mr. Zimau to liis percentage of profits had been paid for somt time. The agreement on which he was now suing recited that he was to procure the due transfer of the property to the new companies on the payment by the new companies of % consideration. The agreement meant that they were to take over mot only Mr. Ziman's rights, but his obligations, [ and whenever he had an agreement for the sale of a concession a deposit would be paid, followed eventually by the balj ance of the purchase price. There waa i a. provision that, if Mi". Ziman should float a new- company to work thtJ ground, and "possibly other adjoining ground," he would, as soon as the scrip for shares wa-s delivered in New Zealand, cause notice to be served on every person holding shares in the old company, when such persons would have the right to take up shares in the new company in the proportion of two shares for every three shares in the existing company. The result of what had taken pla'je was that Mr. Ziman was £25,000 hard cash out of pocket in acquiring options sold to the company that was formed, and he got 25,000 shares fully paid withouthis having to part with any money for them. THE ENERGETIC MINE. Counsel told the learned Judge it was contemplated from the fiist that Wealth of Nations mine might have to be taken over with the adjoining Energetic mine, and plaintiff's case was that the two together could have been sold at various times during the past few years. At first, counsel said, the Wealth of Nations mine was regarded as more or less a worthless proposition, but it had turned out to be a very valuable property. The company had obtained no less than £361,563 worth of gold during the seventeen years to the end of .1913. "A lucky purchase for the Consolidated Goldfields Company/ commented counsel. The net profit was £20,440, the total expenditure having been about £341,000. These figures related to the work in New Zealand, and counsel understood that some £9000 ought to be deducted from the £20,000 in respect of expenses in London. The Judge i According to your way of putting it, they have made £11,000, and you say that, as they have hot resold the property to another company, they owe you £12,000?— Yes. PLAINTIFF'S EVIDENCE. Mr. Ziman denied that he had ever waived, rescinded, 6v abandoned the clauses in the agreement relating to the resale and payment of £12,000 to him. In 1907 h^ became in financial difficulties, and asked the company if he could not sell his right to the company. He was told t^iat the company did not want to buy it from him, and when he suggested that a company should be formed and the property resold, the opinion was expressed -that tho property was not worth it. Mr. Ziman told the Court that he had had very considerable experience of buying and selling gold mines Cross-examined by Mr. fjpjohn, plain- ] tiff expressed the view thab if a .company had been formed to purchase -the property the defendant company, as tho parent company, would havo found tire working capital and the directors. Are you going to suggest, as an expert, that tho mine was saleable at a time when there was only a year of ore reserve in sight? — I say, deliberately,! that this mine, in 1911, was saleable at £100,000. The Judge : Is not buying a gold mine a very considerable gamble? — There is a lot of "gamble" in it, but science has done so much that it can be dealt with as a proper industry. Mr. Upjohn : Does science enable you.* to see into the bowels of the earth be- J yond the reserves in sight? — Yes. j The Judge : I havo not the slightest doubt that if you chose the proper mode you could get up a syndicate to exploit the moon. (Laughter.) Mr. Upjohn: You only trarit a little faith. The Judge: A telescope troujd show you quite enough of tho moon. *or a prospectus. Plaintiff expressed the view that if a company had been formed there would have been no necessity for the defendant company to provide •working capital. The property was such a good proposition that the company <could have put up "paper" capital. ,"A mine that could produce £36,000 in, a, year would be very valuable," he said. Mr. Upjohn: And if they had given you "paper" instead of £12,000 you would have put it on th© market with some representation to people who would buy that this was - a mine, which had produced in three, four, or five months, at the rate of about .33000 profit? Is that what you wanted the "paper" for? —■'The "paper" -would have given m* dividends to begin with. Did yon not want the "paper" to convert it? — That vroulcl havo been my business. The Judge: And th« business of anyone who bought. If you had got your £12,000 in "paper" war* you going to sell it?— 'l -was goiug to keep some and sell some if possible. Mr. J- M'Douall, mining engineer, saad ii» made x survey of the urine in 191k In hie opinion ibo property was worth £93,000. H« put the net. value of the ore reserves «t £58,000. Mr- W. B-. 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put th« capital value of the mine at £120,000. THE DEFENCE. At the outset, Mr. Upjohn submitted that on two points in the agreement there was no case to go to the jury, but the Judge held that as the case had already involved such considerable expense, the issues of fact should b* decided by the jury. Mr. Upjohn then opened his case, and submitted that at no time watt it practicable to sell the mine. He called Mr. David Stephenson, who taid he was a mining engineer with 23 years' experience in many parts of th* world, including New Zealand and Australia. He had had special experience. lh New Zealand, having acted us general manager of various mines there. Mr. Upjolm : Was the Wealth of Nations mine worked for the production of gold or with a view to resale? — Entirely for the production of gold. 'What is tije difference '! — If you were working a mine for a re-sale you would never allow the ore reserves to get down to 20,000 or 30,000 tons, but, if you were working as a producer you would just take the ore as you got it and crush it 'there and then. Witness expressed the view that, in round figures, there had only been about £20,000 net ptofit after seventeen years' working. Cross-examined, Mr. Stephenson said he formed no Opinion, while inspecting the mine, as to its value from the point of view of either a buyer or a seller. Evidence given on commission by Mr. Evaus, who had managed the mine in New Zealand, was read. His view was that the mine was not saleable in or about 1911, because of the unsettled state of the) labour market. The flotation of a company in New Zealand would have been impracticable. Counsel also read evidence given in a similar way by Mr. Richard Burley, of Reefton, N.Z., who was the general superintendent of all mines belonging to the " defendant company. Among the mines under his supervision were the Wealth of Nations and the Energetic. Mr. Bedford M'Neill, formerly president of the Institute of Mining and Metallurgy, was another witness for the defence. ASSESSMENT IN NEW ZEALAND. Sir Westby Perceval, chairman of th© defendant company^ was asked by liis counsel : Assuming that you put together th» Wealth of Nations and Energetic Mines, is it a fact that a company could carry on the mines without working capital?— Certainly not. Sir Westby added that in order to make a return of. say, £200,000 one would have to develop the property much more energetically. Mr. Compston (cross-examining); Is it true that your company is assessed, for rates in New Zealand on a gross value of £60.000?— It may be so. I cannot say offhand. I know we are much ovcrusscssed. That, I see, is an increase of £10,000 imposed last year. Have you appealed ?—? — We havo done all we could, naturally, to get our rates reduced. And you have not been able to? — I suppose not. - Which means that people on th« spot think the selling value of the mine is £80,000?— Well, will you offer us £80,000 for it? i . Now, Sir Westby, you are a member of the Bar. Do you think that is an answer to my question?— l apologise. Counsel repeated his enquiry, and Sir .Westby said £80,000 was the sum they were rated upon. Mr. Compston then asked if the witness considered the mine one of considerable vdue and pronu'se. , Sir Westby: To-day, no. But I know 1 have said so at som« of my annual meetings. Did you say it at the annual meeting in 1911?— Yes. S Have you found any single inaccuracy in any statement upon which you based that opinion? — Except our experience of the mine itself since that statement was made. Fou said: "This mine, I am happy to say, is now a mine of considerable value and promise." Can you point to any single inaccuracy in any statement made to you and upon which you based that opinion? — 1 have not got th© statements before me on which I based that opinion. " THE JURY'S FINDINGS. After counsel had addressed the jury, the Judge summed up, and left "several questions for consideration. These, and the jury's answers, were : — Was the agreement alleged by the plaintiff waived, rescinded, or abandoned by the plaintiff so that the defendant company was absolved from performing Could the defendant company at any time 'since June, 1911, have disposed of the "Wealth of Nations mine to a company specifically formed to acquire and work It at such a. profit as would enable the company to pay £12,000 to the plaintiff and return a reasonable profit to itself?— Yes. • Has the defendant company broken tho alleged agreement by wrongfully refusing to form and float another company to work the mine? — Yes. Has the defendant company, by its acts, constituted the Wealth of Nations miuo and the Energetic mine one property so as to render it impracticable for it to be dealt with separately'' — Yes. Damages, £12,000. Inview of these findings, Mr. Justice Darling entered judgment in favour of the plaintiff for £12,000, with costs, and stayed execution with a view to a possible appeal, counsel for the company stating that it was desired to raise a point as to the construction of the agreement.